Motilal Oswal Securities has maintained 'Buy' on Sobha Developers with target price of Rs 450 as against current market price (CMP) of Rs 359 with 25% upside in its report.

Commenting on the investment rationale, the stock broker said, ''Weakness in the Gurgaon market will remain a near-term overhang, though we expect stability in its home market to help keep SOBHA's overall operations resilient.

We believe its planned launches are right-priced and are in less penetrated locations. SOBHA will, therefore, be a key beneficiary of improving demand outlook in these markets. We assume 9% CAGR in presales over FY14-16, leading to 14% CAGR in collections and 11% CAGR in cash EBITDA.

This would support its entry into new markets without resulting in deterioration of gearing from the 0.5-0.6x range. The stock trades at 11.3x FY16E EPS, 1.3x FY16E BV (12-14% RoE), and 8.4x FY16E cash EBITDA. Maintain Buy; our target price of Rs 450 implies 25% upside (10x FY16E Cash EBITDA)."

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